Lawmakers reconsider in wake of 700 MHz auction: Some call for D-Block conditions to be removed

While the Federal Communications Commission’s failure to attract a bidder for a national commercial-public safety spectrum license dominated a House telecom subcommittee hearing today, the panel’s review of the 700 MHz auction also served as a platform for addressing other major wireless policy issues.
Indeed, some policymakers – particularly Democrats – see the D-Block fiasco as an opportunity not only to craft new rules for a re-auction that could give rise to a licensee capable of addressing first responders’ interoperability and broadband requirements but also to revisit key wireless issues raised over the past years.
“In wireless, we have a new opportunity with the ‘beachfront’ property of the spectrum,” said Rep. Edward Markey (D-Mass.), chairman of the House telecom panel. “And what is the result so far? At present, it looks like two mega-resorts are going up on the beachfront in the form of Verizon [Wireless] and AT&T [Mobility], solidifying their wireless market and spectrum real estate positions. Yes, Echostar has won almost a nationwide footprint – not to compete with Verizon and AT&T in the mobile wireless market – but rather to have spectrum as an adjunct to their satellite television service. . Women-owned and minority-owned businesses did not break through. There is no new national competitor to provoke new broadband competition, innovation, and consumer choice coming out of the auction. As a result, the wireless ‘3rd pipe’ to compete with the telephone and cable industry is proving either elusive – or simply allied with one of the two existing providers in much of the country. This is too cozy and not nearly competitive enough.”
Click here for full 700 MHz auction results
Markey said the decision by the FCC under former chairman Michael Powell to repeal the spectrum cap has proved ill-considered.
“The FCC must revisit these policy decisions in light of the recently-completed auction and take corrective action going forward,” the Massachusetts lawmaker stated. “The commission has the responsibility to learn from the licensing mistakes of the past and to widely disseminate licenses and promote greater broadband competition and should endeavor to do so.”
Markey and other lawmakers – as well as FCC Chairman Kevin Martin – said the commission should not abandon the public-private partnership approach as federal regulators consider changes to D-Block guidelines. Suggestions include lowering the $1.3 billion reserve price for the license, modifying the penalty associated with network-sharing agreement negotiations between the D-Block winner and the public-safety broadband licensee, clarifying upfront the obligations and expectations of the private sector partner and perhaps licensing the D Block on a regional basis with an interoperability requirement.
“Any and all options should be on the table,” Martin told subcommittee members.
Rep. Cliff Stearns (R-Fla.) said the D-Block license should be re-auctioned without any conditions.
“The auction raised $19 billion, and that’s great, but it should have raised a lot more,” said Rep. Joe Barton (R-Texas), ranking member of the House Commerce Committee. “True, the Congressional Budget Office estimated the auction would raise $12.5 billion. But other studies estimated that, without the conditions, the spectrum would raise $25 to $30 billion. I think that the higher estimates would have been about right, based on the results where the C-Block revenue was about half of what many folks thought, and the D Block did not sell at all.”
Verizon Wireless won a nationwide collection of regional C-Block licenses, which are subject to an open-access condition. The No. 2 mobile phone carrier is also taking steps to open its existing network to third-party devices and applications. Other national cellular carriers have indicated they are moving in the same direction. House lawmakers said they will closely monitor industry commitments on open platforms.